Amira Nature Foods Ltd. (NYSE: ANFI) On Traders Radars

According to a 2017 study conducted by the Cleveland Clinic, obesity is the number one cause of preventable death in America, surpassing tobacco use. That said, obesity can lead to stroke; high blood pressure; diabetes; heart disease; and gallbladder disease.  It can also cause various forms of cancer, like breast, colon, and prostate.

Furthermore, with obesity now exceeding 30% in 29 states, the U.S. is facing a serious epidemic on its hands. The lack of healthy food choices has created an opportunity for companies brave enough to tackle this crisis.

One of those companies pushing the charge for healthy eating is Amira Nature Foods Ltd. (NYSE: ANFI).

Amira Nature Foods Ltd. (NYSE: ANFI)

Amira is a global leader in the basmati rice market.

The company has over 300 SKU’s with sales in over 5 continents.

The company sells its products to buyers in the Asia Pacific, Europe, the Middle East, North America; and distributors and retail chains in India.

Moreover, the company has products in Costco, Whole Foods, Publix, Safeway and many other locations in the US.

Over its 100+ years in business, Amira has amassed several accolades, including being named as one of India’s fastest-growing mid-sized companies(2010, 2011, 2012, and 2013).

Amira is headquartered in Dubai, UAE. It has offices in India, Germany, the U.S., and the U.K.

The company sells more than 20 in house brands across the globe.

Amira Nature Foods (NYSE: ANFI) Offers A Healthy Choice That Americans Are Missing

Now, you might be thinking that all rice is the same. However, that’s not true. In fact, basmati rice is only grown in the foothills of the Himalayas.

Basmati rice is rich in vitamins, fiber, protein, and carbohydrates. Also, you can find several minerals like calcium, potassium, zinc, copper, selenium, iron, and magnesium.

The health benefits of basmati rice include: lowering blood pressure, preventing disease, supports weight loss, and maintains a healthy brain and bones.

That said, Amira draws a majority of its revenue through the sale of basmati rice.

Given its unique health benefits, demand for basmati rice is set to grow over the coming years.

The worldwide market for basmati rice is expected to reach $17.7B by 2022, at a CAGR of 11.1% (2017 to 2022), according to data out of Research Report Insights.

Amira is one of the large players in the domestic India market.

Amira’s expanded portfolio includes premium basmati rice, value basmati rice, and organic foods.

Amira Nature Foods (NYSE: ANFI) Is Running An Open Race

Rice is a primary food source for most of the world’s population. In fact, it represents more than 30% of caloric consumption. However, the industry is rather scattered, with limited concentration of brand ownership on a global level.

ANFI is vertically integrated and ready to potentially take market share away from the competition.

Here are some of the company’s advantages:

  • Global presence with established roots – With procurement, processing, and distribution facilities throughout the Basmati rice producing region
  • Organic sourcing initiative – Developed organic sourcing initiatives which allow Amira to source and sell organic certified products in India, Europe, and the US
  • Reliability to valued customers – Establishment and fostering of stable relationships across 5 continents and with many of the world’s premier retailers
  • Global brand and value added offerings – Focus on providing customers with consistent high-quality, authentic specialty rice
  • Adding value with state-of-the-art processing capabilities – State-of-art, fully automated and integrated the processing and milling facility with a capacity to process c.24 metric tons of paddy per hour
  • Stability of supply – Ability to deliver large quantities of high-quality products globally in a timely manner, essential to the success of both the Amira branded and third-party branded businesses

Amira Nature Foods (NYSE: ANFI): A Potential Value Play?

Amira Nature Foods had a market capitalization of $11.75M as of Dec. 21, 2018. Now, based on value ratios, ANFI could be considered undervalued. For example, currently, the stock is trading at a price-to-sales ratio of 0.03, while the industry average is 1.90, according to Morningstar. Additionally, it had a price-to-earnings ratio (P/E) of 1.15, while its competitors had an average P/E of 11.79.

Not only is the stock potentially undervalued based on its revenues and earnings, ANFI is also trading well below its book value, with a price-to-book ratio of 0.05, while the industry average is 1.81.

Source: Morningstar

With ANFI trading well below the industry average for some key valuation ratios, it could be a value play, and could even attract potential buyers.

Moreover, Amira was able to increase at a compound annual growth rate of 15.5% between 2010 and 2017. With such high revenue growth rates, this company could be significantly undervalued by the market.

According to Finviz, over 50% of the company is owned by insiders. That in mind, that shows that the company’s officers, directors, and key insiders are confident in the company.

Final Thoughts

Based on multiple fundamental ratios, ANFI is thought to be “cheaper” than its competitors on a value basis. ANFI focuses its business on a key commodity, rice, that can withstand any economic cycle. In fact, this could be one of the best plays at the current moment. Given the company’s growth rate over the past years, there could be an immense degree of upside potential.

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       Sources:

  1. www.newsroom.clevelandclinic.org/2017/04/22/cleveland-clinic-study-finds-obesity-top-cause-preventable-life-years-lost/   
  2. https://stateofobesity.org/adult-obesity/
  3. www.amira.net
  4. https://www.morningstar.com/stocks/xnys/anfi/quote.html
  5. https://finviz.com/quote.ashx?t=ANFI
  6. https://www.researchreportinsights.com/report/rd/110114763
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